naturalcatchtuna| Pimco changes his opinion about US Treasury bonds, saying yields are attractive

Once upon a time, when inflation fell and economic growth slowed, long-term US Treasuries were the best choice for safe-haven funds.

As NewEdge Wealth's Cameron Dawson said on Surveillance, the situation is different now.NaturalcatchtunaThis is partly because investors are not sure what the risk they are hedging is. The bigger risk now is a slowdown or persistent inflation? How to assess the unrest in the Middle East? Could it cause oil prices to soar, or will it restrict trade and drag down economic growth?

"now that we've seen yields pick up, get ready to buy," Dawson said. "once it reaches 4,NaturalcatchtunaIn the .75-5% range, yields have to rise sharply to offset the underlying income you receive. That means you want to buy on the bargain rather than sell. " This is an interesting moment in the market, and the reason Wall Street is talking about buying debt is not geopolitical risk, but tactical buying opportunities brought about by rising yields.

The yield on the 10-year note broke through 4.6% on Monday. The two-year yield is close to 5%. Academy Securities's Peter Tchir points out that 10-year yields have reached levels they thought they would not reach until the end of the year. This makes him sceptical about the outlook for US Treasuries because one of the lessons of the Iranian bombing is that the US needs to increase defence spending, which will push up inflation and worsen the US fiscal position.

But investors such as Pimco's Andrew Balls have regained their bullish view on US Treasuries. Three weeks ago he was talking about reducing his position in long-term Treasuries, but now he has a very different tone, saying that "the level of US bond yields looks attractive".

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